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Tight crop supply puts pressure on plantings

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Tight crop supply puts pressure on plantings

Higher crop prices haven’t slowed demand, at least not yet, based on USDA’s latest world ag supply and demand estimates.

The Ag Department raised corn exports by 75 million bushels this month, to 2.675 billion bushels, following export inspection data that showed March sales were the largest monthly total on record.

Meanwhile, feed and residual use of corn grew 50 million bushels, to 5.7 billion bushels, and corn used for ethanol increased 25 million bushels, to 4.976 billion bushels, in this month’s report.

“We’re still moving a lot of corn and getting better news out of the ethanol industry,” said Matt Huston, grain analyst/broker with NFC Markets in Chicago. “Basically, every item on the demand side of things for corn is really rolling.”

USDA also raised its estimate of soybean exports to 2.28 billion bushels, up from the previous estimate of 2.25 billion bushels. The move reflects record bean exports the first half of the marketing year.

But, prices were mixed Friday as USDA also raised its soybean production estimate in Brazil by 2 million metric tons to 136 million metric tons in response to favorable conditions in the southern state of Rio Grande do Sul and updated harvest results.

“I don’t think the market was overly surprised (by the boost to Brazilian bean production), but it’s keeping a cap on soybean prices short term,” Huston said.

USDA left its season average price estimates unchanged for corn ($4.30 per bushel) and wheat ($5) and raised soybeans by a dime to $11.25.

“I don’t think there’s anything in these numbers to change the overall sentiment in the market. We’re still in a bullish trend,” the analyst noted. “Now we start looking more at the planting season and weather going forward.”

Huston believes the market must continue to incentivize farmers to plant more corn and soybeans in coming weeks than USDA estimated in its March prospective plantings report, which pegged acreage well short of trade expectations at 87.6 million for soybeans and 91.1 million of corn.

“Most of the industry thinks those numbers printed in the prospective plantings report may be the lowest for corn and soybeans we see going forward,” Huston said. “The prices are showing it seems there’s not enough acreage to meet current needs.”

USDA lowered ending stocks of corn from 1.5 billion to 1.35 billion bushels, left soybean stocks unchanged at 120 million bushels and raised ending stocks of wheat by 16 million bushels to 852 million bushels (down 17% from last year) in the latest WASDE report.